For thirty-five years, I have viewed the burden of increasing regulation from the agent’s perspective but I have just been forced to look at it from the perspective of the tenant.
One of my daughters did her degree at Kings College London and made what turned out to be a rather unwise choice of student accommodation. I do try to avoid interfering in my children’s lives. I believe that they should, whenever possible, learn life’s lessons for themselves but the flat that she chose must be one of the most horrid properties in the whole of London. However, she chose it because it was cheap and seemed happy to put up with her squalid surroundings in order to have more money available for the more important things in life like going out.
The problem started when she moved out. The landlord said that he was going to keep the entire deposit to pay for “the extensive damage that they had caused to the property”. They denied damaging anything. Due to my background, she asked me to intervene. I looked at the documentation and it was a complete mess. There was no prescribed information, there was no inventory, the property had an HMO licence for four occupants but there were six people living there, each in a separate bedroom, and the tenancy agreement had a legal clause in it which required a month’s notice at the end of the statutory AST period.
It seemed obvious that the landlord did not have a leg to stand on so we took the matter to the DPS. I prepared a detailed submission for them that set out why the deposit should be returned. The main argument was that there was no photographic inventory or indeed an inventory of any sort. We wrote to the DPS to start the arbitration process. Unfortunately, by the time they replied, the lead tenant, who is a medical student, was in the middle of his end of year exams. He was revising eighteen hours per day, seven days a week, and missed both the emails. As a consequence, the landlord won the arbitration by default and won the right to retain the whole deposit with no right of appeal. I was furious.
There were, however, other ways to recover the money. We told the landlord that we would issue court proceedings for a payment of three times the deposit amount which was payable because he had failed to issue the prescribed information. When we told him this during a telephone conversation, he did not seem to know what prescribed information was. However, he must have got some advice from somewhere because ten days later, he sent us a crudely forged and unsigned document together with an affidavit that claimed that he had served it at the correct time. I took legal advice and was told that we would need to go to court to prove this at a likely cost of around £3,000. The risk to reward ratio simply did not justify this.
“Never mind”, I thought, we would get him for housing six tenants in a house that has an HMO licence for only four. We telephoned the local authority. They were not interested in talking to us. We went to visit them in person. We showed them bank statements that said “rent x six people” and we showed them photographs of six beds in six separate bedrooms. They said that there was insufficient evidence to prosecute the landlord. We invited them to visit the property again which is almost certainly still rented out today to six tenants. They declined to do so.
So the outcome is that a sleazy landlord of a disgusting property who has broken almost every rule in the book has got away with it and there is absolutely nothing that can be done about this.
Meanwhile my clients, who are all reputable companies, live in constant fear of being hit with a huge fine for even the smallest transgression of the most minor regulation. A client in the Midlands has been hit with a six-figure fine for technical breaches of the money laundering regulations. A client in London has been threatened with a substantial five-figure fine for failing to deduct tax from a landlord who had moved abroad and was using the “care of” address in the UK.
I have long been of the opinion that most regulations target the wrong problems in the wrong way. Despite this, I always thought that they afforded some protection to the tenant. However, to see my clients struggle with the cost and burden of regulations only to see how easy it is for an unscrupulous agent to ignore them completely, well, that really does stick in the gut.
The current regulations are a complete mess and the time has surely come for a thorough review of the regulations that control the letting industry and a thorough review of how they are enforced. Until this happens, reputable agents will continue to struggle whilst the unscrupulous ones will go unpunished.
Adam Walker is a management consultant, business sales agent and trainer who has worked in the property sector for more than twenty-five years.